Labor Law - Federal

Eighth Circuit affirms district court's grant of summary
judgment in favor of hospital's CEO and various hospital board members
on a doctor's action alleging that the hospital violated his due
process rights and interfered with business expectancy, holding: (1) an
independent contractor agreement did not provide the doctor with a
reasonable expectation of continued employment in the hospital's
emergency room; and (2) the hospital's contractual right to request the
doctor's removal from the hospital precluded the doctor's claim for
tortious interference with business expectancy. Schueller v. Goddard, No. 09-3047, 2011 WL 292207 (8th Cir. Feb. 1, 2011).
Plaintiff Dr. Steven Schueller alleged that the CEO and various board
members of Drew Memorial Hospital violated his due process rights and
interfered with his business expectancy by requesting that he no longer
serve as an independent contractor. The hospital entered into an
emergency service agreement with a different physician, Dr. William W.
Williams, on August 2002. That agreement provided that Williams would
be the sole provider of emergency room staffing for the hospital, but
it also provided that the hospital could request the immediate removal
of "any physician at any time" from further service. Plaintiff was not a
party to the agreement. In January 2003, Plaintiff entered into an
independent contractor agreement with Dr. Williams, pursuant to which
Plaintiff agreed to provide emergency room services at the hospital on
behalf of Dr. Williams. That agreement contained a provision stating
that "either party may terminate this agreement . . . with reasonable
cause . . . ." As defined in the agreement, reasonable cause included
"the request by [Drew Memorial] for the immediate removal of
Independent Contractor from further service . . . ." In December 2006,
as a result of patient complaints, the CEO of the hospital asked
Williams to remove Plaintiff from service at the hospital.
Accordingly, Williams notified Plaintiff that he would no longer be
scheduled to work in the emergency room effective January 31, 2007.
Plaintiff sued the hospital in federal court under 42 USC Section 1983
and state law, and the district court granted summary judgment in favor
of Defendants, from which Plaintiff appealed. Held: In affirming the district court's dismissal of
Plaintiff's due process claim, the Eighth Circuit rejected Plaintiff's
argument that he had a valid expectation of continued employment
stemming from both the emergency service agreement and the independent
contractor agreement. Specifically, the court cited the unambiguous
language in both agreements giving the hospital "sole discretion" to
request Plaintiff's removal. Such plenary discretion, the court
reasoned, was inconsistent with Plaintiff having a legitimate claim of
entitlement to continued employment. What is more, the court
maintained that even if Plaintiff expected to continue serving as an
independent contractor, his expectation was unreasonable in light of the
patient complaints and hospital's plenary discretion to request his
removal.
With respect to Plaintiff's business expectancy claim, the court held
that the hospital's absolute right in the independent contractor
agreement to request Plaintiff's removal precluded Plaintiff from
making a prima facie case of tortious interference. Specifically, the
court reasoned that Plaintiff had failed to produce any evidence that
the hospital "improperly interfered" with the independent contractor
agreement between Plaintiff and Dr. Williams (an essential element of
the claim under state law) by exercising its contractual right to
request Plaintiff's removal in response to continuing complaints from
its patients. As such, the court affirmed the judgment of the district
court.